I have the same bug since I upgraded Sim 2 to the latest version two days ago. I started that quest before upgrade and I did not have this problem then. Now Paul follows me everywhere when I fast travel, load save, or he appears randomly near me. He stalks me in my home, I am alone, then I go out of the shower and there he is, Paul standing in the corner... watching. I can't complete his quest. I went to that shack, saw the dog, I can talk to it, this does not work, or pet it, dog gets ups, and lies down after few seconds. I don't know if whole quest is bugged or I have to figure out what to do with the dog. Quest log says that I have to investigate source of the sounds, so I pet the dog, can't talk to it, I'm stuck.